Observations on economics, the academy, the wider world, and things that run on rails.

21.6.13

THE LOGIC OF POSITIONAL ARMS RACES.

More clearing out of the archives, this time following a Betsy's Page link from last year. Power couples that want their power incomes, and also to get their issue into Harvard cannot leave their spawn in the care of just any day care center. To get high productivity caregivers -- put another way, careful or more individual attention -- subscribers have to pay more.

The main reason for the high cost of care, advocates say, is the salary expense for day care centers. But child care workers are some of the lowest paid professionals in the American workforce. You can’t reduce costs, and you can’t charge more.

At the same time, many of the same advocates who decry the impact child care expenses have on families are pushing for an increase in the quality of care. This usually means better licensing, regulations and oversight, as well as requirements for a better educated workforce. But these changes would clearly make child care costs go up even further.

The article invokes all the usual difficulties people face, including the lack of mandatory paid family leave (doesn't matter if the high achievers are also going to want to return to work quickly) or the catch-all "affordability" that runs afoul of a law of conservation in economics, which is that the seller of a service cannot hope to extract more than a buyer wants to pay. Thus day care operates under the same constraint as manufacturing, where a customer can have any two of good, fast, or cheap.

To introduce either employer-paid day care or family leave, or to make its provision a government enterprise, though, is to introduce the third-party problem into price discovery. There's a P. J. O'Rourke quip, "If you think health care is expensive now, wait until you see what it costs when it’s free," that generalizes to state-supported day care or anything else. (Just keep following Insta Pundit and Pajamas Media generally for the accumulating evidence on what Obama "Care" is costing people.)

Not only that, the strivers and the positional arms racers will still have incentives to opt out of the public system, entitlement or not. Or, as is the case with education, the good day care will come bundled with a McMansion.